Open Wide and Say... Ka-Ching

November 10, 2005

Oral care marketers cash in on emerging segments and new products.

Oral care product marketers are really looking out for consumers these days. Not only do they want shoppers to have brighter smiles, healthier teeth and fresher breath, but they also want to save them time, energy and money at the same time. After all, healthy choppers mean healthy spending at the checkout counter for toothpaste, mouthwashes, gums and strips. And judging by the reaction to some recent launches, consumers seem to be rewarding marketers for looking after their mouths.

Whether it's multifunctional toothpastes or whitening strips or plaque-killing gums, many product launches these days are extensions of established brands. Marketers see strong demand for items that offer odor-fighting and whitening benefits, and consumers want to get those benefits in ways other than brushing. And when they do have to brush-which everyone considers a chore-they want to spend the least amount of time cleaning. That's a key reason for rapid growth in electric toothbrush sales and new product rollouts. So even though the toothpaste and mouthwash segments are flat, the category remains robust, supported by a number of strong launches in emerging segments.

According to A.C. Nielsen, total U.S. food, drug and mass merchandiser sales of oral hygiene products grew 4.7%. The data, however, don't include sales at Wal-mart, which ceased to publicly report its sales for the category (previous years' data suggest that the country's No. 1 retailer accounts for nearly 30% of category sales). Sales for the 52 weeks ending Dec. 12 in all segments reached $3.3 billion, according to A.C. Nielsen. Happi estimates that Wal-mart would bring the total to more than $4.7 billion.

Toothpastes continue to be the biggest portion of the category. Of the $3.3 billion total, they account for nearly 41%, or $1.3 billion. Mouthwashes and rinses are second with sales of $629 million, followed by toothbrushes at $598 million. Sales of dental accessories such as whitening kits and of mouthwashes were brisk last year, growing at 70% and 4.9%, while tooth powders and breath fresheners declined 14.7% and 9.6% respectively.

In toothpaste, Colgate-Palmolive remains the No. 1 marketer, according to Chicago-based Information Resources, Inc. Sales of Colgate, Colgate Total, Total Fresh and Colgate 2-in-1 paste had sales of more than $440 million in stores other than Wal-mart. Crest, however, is the No. 1 brand. This Procter & Gamble brand has sales of more than $252 million outside of Wal-mart.

In the mouthwash and rinse segment, Pfizer is king with its Listerine brand. It remains far ahead of all others with nearly half of the top 10 brand share. Listerine sales are estimated at around $320 million. Private label washes are second, followed by Scope, Plax and Act, according to IRI. A.C. Nielsen estimated that mouthwash sales rose nearly 5% last year while rinses, which include fluoride treatment and others, declined 1.5%.

Overall toothbrush sales fell last year, but the one bright spot was power brushes. Major rollouts by Colgate and P&G helped to boost the dental accessories segment 35% last year, according to IRI.

Strips Pace Category Growth
Without a doubt, the category's single most important new product is Crest Whitestrips. Since its introduction last year, Procter & Gamble's blockbuster product has singlehandedly carved out a new segment. Following its May rollout, the company has posted more than $100 million in sales. Within the tooth polish and powder category, the strips now account for more than half the dollar market share, according to IRI. In the supermarket, drug and mass channels excluding Wal-mart, the strips racked up $69 million from May to the week ending Dec. 2.

P&G said the overwhelming response was not unexpected. Through extensive research and development unlike any since the introduction of fluoride toothpaste, the company was able to tap into two major consumer groups-women ages 35-50 and teenagers. The launch has been so successful that a number of marketers hinted at bringing out their own versions of Whitestrips.

"We've taken a category that really didn't exist...and made it a major category," said Bryan McCleary, a spokesperson for Procter & Gamble. "We are seeing a number of interesting (sales) trends, and some of these were surprises to us."

McCleary said the strips have become a popular product among brides. After initial consumer research showed women's strong interest in whiter teeth, P&G targeted their marketing at brides and wedding planners. "It sort of popped in the research," he added.

While the strips aren't the only whitening treatment on the market, their ease of use and money-back guarantee seem to have caught on. Applied to the teeth like a band-aid, the plastic strips use hydrogen peroxide, sodium hydroxide and other ingredients to brighten. Consumers pay around $40 for a two-week treatment, and P&G guarantees to refund consumers if their teeth aren't "noticeably whiter" after a week of use.

With sales strong among women, the company sees potential for more growth among male consumers. Without question, McCleary said, the whitening segment appears to be the fastest growing with sales of more than $500 million. Considering sales of whitening products were nearly non-existent five or six years ago, it's easy to see why P&G and perhaps other marketers will try to further tap into this emerging segment.

Because of the market response, Crest Whitestrips will surely spawn similar products. Some competing marketers are already considering launching their own versions, and chances are some of these products will find their way onto store shelves in the near future.

Consumer desire for whiter teeth is translating into other new product launches. For example, Church & Dwight's Arm & Hammer brand last year rolled out new gums under its Advance White line. Featuring tartar control, the gums guarantees users that their teeth will be two shades whiter after use. Jim Daniels, senior director of marketing for personal care at the company, said the product is "doing exceptionally well" since its launch in the first half of the year.

Similarly, Wrigley Gum in conjunction with P&G has launched Orbit White, an extension of its Orbit line. The gum is to be widely available soon.

The Market Buzz Is Battery Powered
Ease of use is one reason for the Whitestrips' success. And it's also a key factor in the growing popularity of electric toothbrushes. That, coupled with lower prices, is creating quite a buzz with consumers.

While rechargeable toothbrushes had dominated the segment in the past, battery-powered versions are now quickly gaining popularity. According to Colgate-Palmolive, battery-powered brushes had only been 4% of the segment in 1999; today they are 38%. And with recent roll outs of low-cost products, that number is likely to grow.

Suzan Harrison, vice president and general manager of Colgate's U.S. oral care products, has said that power products are leading brush sales growth. Colgate officials pointed out that consumers will buy at three levels: rechargeable, premium battery and entry level battery.

After a strong launch of its Actibrush premium battery brush, which was initially introduced at $19.99 in May 2000, Colgate rolled out a lower-priced version called Colgate Motion last October. Priced at $5.99, the item is more competitively priced against traditional brushes and will certainly "entice" new buyers to the electric segment.

"The key to driving growth for emerging segments is multiple offerings," Ms. Harrison said at the time of the launch.

While Colgate won't say how well its latest brush is selling, competitor P&G claims it has the No. 1 brand in the segment. Its SpinBrush, also tagged with a retail price of $5.99, first hit the store shelves last April after the line was acquired from Dr. Johns Products at the end of 2000.

Available in adult's and children's versions, the brush is outselling other battery-powered brushes by a 2-to-1 margin, company executives claim.

To improve on the brush, P&G announced last month that it would manufacture SpinBrush with replaceable heads. The company said a fixed head was the No. 1 complaint consumers voiced about the original brush. Two replacement heads will be sold at the same price as the brush itself.

Colgate's Motion battery-operated toothbrush takes aim at the lower tier of the electric segment, which has been dominated by P&G.

According to IRI, more than 7 million units of the SpinBrush were sold last year in food, drug and mass merchandising outlets not including Wal-mart. Colgate's Actibrush, on the other hand, sold 1.4 million units. Both companies posted exceptional gains in unit and dollar sales for the brushes. Their growth reflected the rising acceptance of power brushes as even rechargeable products grew by double digits. Manufacturers such as Braun and Teledyne both grew unit and dollar sales significantly last year, according to IRI.

Despite the sales growth of electric toothbrushes, marketers still see opportunities to sell conventional brushes. Gillette, the maker of Braun products, last October introduced Oral-B Stages, a line of manual toothbrushes for children 2-8 years old. The brushes are customized for various stages in a child's life, with each stage customized for his or her growing jaw and teeth.

Building Mega Brands
Like other consumer product marketers, oral care manufacturers are following the same trends: brand extension and segmentation. Capitalizing on well-established names is one way for oral care marketers to roll out not only new but innovative products. Church & Dwight, for instance, is making the most of its Arm & Hammer Baking Soda brand. Last September the company launched the Advance Breath Care line, which uses the odor-fighting properties of baking soda and zinc.

Colgate's Fresh Confidence toothpaste and Wrigley's Orbit White are new products recently launched to cash in on consumers' continual search for fresher breath and whiter and brighter teeth.

Church & Dwight's Daniels said selling consumers the idea of fighting bad breath with an ingredient they already identify as a freshening agent isn't too difficult. Because of the Arm & Hammer name, Advance Breath Care has strong appeal, he said.

"The notion of mega branding both in the U.S. and globally is for many reasons a popular and smart idea. There are huge efficiencies," he said. "We're looking at where we can take our equity."

The new line touts the use of sodium bicarbonate, the ingredient in baking soda, to neutralize odor and zinc, which kills bacteria and binds to volatile sulfur compounds in the mouth. Zinc is also retained in the mouth to provide lasting power.

Mr. Daniels said he believes fresher breath continues to be a strong selling point for oral care products. He said consumers want more than cosmetic benefits, and that's why Advance Breath Care emphasizes its three-hour protection. The line includes toothpaste, mouthwash, gums and mints.

Another mouth freshener quickly catching on in the marketplace is Listerine's Cool Mint PocketPack strips. Packaged in a convenient pocket-sized container, the strips kill 99.9% of odor-causing bacteria in 30 seconds.

According to the company, the tiny strip is a "micro-thin" starch-based piece of film containing the same ingredients found in Listerine mouthwash (thymol, eucalyptol, methyl salicylate and methol). It dissolves instantly on the tongue and releases mouth-freshening agents.

Although the company claims the strips have the same breath freshening power as mouthwash, it emphasizes that the product should be used as a supplement to the rinse. While it kills bacteria on the tongue that causes odor, it can't eliminate the germs that cause plaque or gingivitis. Still, Pfizer is targeting consumers who want clean breath but want it on the go.

Nowhere in the oral care category is there more segmentation than toothpastes. As the largest portion of the market, toothpastes are available for every segment of the population. Need help with plaque? How about tartar control? All of the above? Certainly new rollouts are boosting sales.

Although Colgate-Palmolive is the No. 1 toothpaste marketer, P&G's Crest remains the No. 1 toothpaste brand. New introductions and line extensions have helped this mega brand sustain recognition among consumers.

Among the top 10 brands, Colgate accounts for four of them, according to IRI. Cannibalizing some of its own business, the company posted a 705% sales gain on its 2-in-1 toothpaste but suffered a 28.7% setback on its Total Fresh Stripe. Crest rose 1.2%, while GlaxoSmithKline's Aquafresh brand fell 12.7%.

Industry observers point out that multifunctional toothpaste remains a strong seller on the shelves, and that innovations will drive sales.

Although no breakthrough active ingredient appears to be on the horizon, marketers alternatively are touting high-impact flavoring and whitening actions. With the popularity of freshening mints and whitening gums growing, oral care marketers are deftly positioning their brands to make the most of these trends. Surely the success of Procter's WhiteStrips speaks volumes about consumers' wishes. And the cornucopia of new products aimed at giving them a brighter, cleaner smile signals that oral care marketers are complying with their wishes.

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